The Wisdom of a One-Page Strategy

The Wisdom of a One-Page Strategy

By Jim Cardwell, CEO, Cardwell
6/19/2006 -- Posted on Creditunions.com

What good is a strategy if no one uses it?

The problem with the typical strategic plan is that it is too complicated. It usually has an extensive table of contents, is often several pages long, is in a three-ring binder with numerous tabs, and it frequently contains a lot of narrative, accompanied by an abundance of charts and graphs. It is designed to impress – and it often does.

This multifaceted strategic plan may be impressive, but it is hard to explain – even by your senior leaders. It is a compound-complex document that is difficult to remember. So it is seldom fully communicated to the people who do the day-to-day work: your managers and supervisors, your front-line staff and your support team.

As a result, your staff members are disconnected. They fail to see how this impressive strategic plan impacts them. Therefore, they’re not engaged. And they aren’t helping you because they don’t know what you are doing or why it is important.

To make this strategic plan work, you need to re-frame it. You need to get your strategy down to a single page. Keep it meaningful, intuitive and concise. The elements need to work together; they need to tell a story. And it all needs to be written in an easy, logical format that every employee in your credit union can understand, embrace and reinforce.

To re-frame your strategy, you need to build a shared understanding of why you exist as an organization, where you are going, and the most critical things you will focus on to get there. You will also need to help people understand the fundamentals of your business model, including your member value proposition and how you will make money to fund future growth.

Let’s go over each of these in a little more detail.

Core Purpose: You need to start by clarifying why you exist. In his best-selling book, Good to Great, Jim Collins says a Core Purpose is a statement that captures the soul of the organization. It is your organization’s most fundamental reason for being.

This short statement (typically less than seven words) captures your credit union’s higher calling. Work becomes much more than just making savings and loans. It builds a shared feeling that we are all doing something special here. People get excited about making a difference. It is their motivation for coming to work each day – they are there for a lot more than the money.

BHAG: People also need to understand where you are going. There needs to be a clear five-year goal that represents the pinnacle of what you are trying to achieve. Collins calls this a BHAG (a big hairy audacious goal). In his words, “A true BHAG is clear and compelling, serves as a unifying point of effort and acts as a catalyst for team spirit. It has a clear finish line, so the organization can know when it has achieved the goal. A BHAG engages people – it reaches out and grabs them. It is tangible, energizing, highly focused. People get it right away; it takes little to no explanation.”

Collins suggests that a BHAG is a 10- to 30-year goal – but for most of us, that is so far off in the future it is unreal. We suggest a 5-year timeline. It is more motivational and reachable (to everyone).

It is important to make sure your team identifies with and personally buys in to the BHAG measure (typically a number or ratio) as their 5-year target. It should be a stretch. As a matter of fact, there should only be a 70 percent chance you will hit it (assuming your current status quo). That is part of the magic. To get there, you have to fundamentally revisit the way you are running your business. That doesn’t mean you need to change everything. But it does mean you will probably need to make some trade offs (i.e. stop doing some practices) to tighten the fit.

Strategic Focus: Using 80/20 thinking, you quickly realize that getting to your destination will require you to identify a few things that will become your center of attention over the next one to three years. You can no longer do everything you see in Credit Union Times or every interesting idea from your last conference. Some things will fit … many will not.

To reach your BHAG as quickly as possible (while staying within the parameters of your Core Purpose), you will need to concentrate on a few things: typically three or four areas of strategic focus. A few examples:

• Improve our internal systems and infrastructure
• Target member segments for needs-based service delivery
• Build a WOW sales and service culture

Note that these are the areas that your credit union should emphasize over the next one to three years. The Strategic Focus operates at the 20,000-foot level. It is used to guide and filter near- and intermediate-term decisions.

If you have more than three or four areas of Strategic Focus, you have missed the boat (i.e. you are trying to do too much).

Business Model: Some people call this “the concept of the business.” It defines two very important dimensions of your organization:

• Your Member Value Proposition
• How You Make Money (to fund future growth).

The Member Value Proposition: Work with your team to answer three simple questions:

1. Why do people choose your credit union? (Why do they pick you over other competing financial institutions? What’s so special about what you have to offer?)

2. Why do members stay with you? (Once you have them in the door, what keeps them from taking their business elsewhere?)

3. How are you building member loyalty over the longer term? (How will you grow deeper balances and broader relationships? How will you get your members to refer you to their friends?)

How Do You Make Money: There needs to be a source of revenue to fund day-to-day operations as well as future growth. To help you achieve these goals, it is important that everyone understands where the money comes from. In a credit union there are four basic revenue streams:

1. Net Interest Margin
2. Non-Interest Income
3. Operations Efficiency
4. Deep/ Broad Member Relationships

In many credit unions, all four areas make some contribution to your bottom line – but if you are focusing on all four, you have no strategy. You will have much more impact if you concentrate your efforts on one (or possibly two) of these. Then you can develop some powerful tactics for improving (or maintaining) your ROA over the next twelve months.

For a sample of a one-page strategy, see http://www.connectionsonline.net/docs/strategypage.pdf

In conclusion, framing your strategy in a simple, straightforward fashion makes it easy to communicate and painless to comprehend. It tells your story in a meaningful way. And it widens the circle of people who “get it.” This is fundamental to employee engagement — which builds the kind of motivation you see in high performance organizations. Your people (at all levels) want to make a difference. As a leader, you need to help make this happen.

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